High prices and low inventory. Here’s what to know about Columbus’ housing market.
Aaron Hebert and his wife Sarah Jane purchased their current home right before the pandemic began because it had a pool. A few years later, the couple was ready to move out into a home without a pool.
Hebert knew preparing their Columbus home to be sold meant some changes to his family’s lifestyle and wrangling their five children to get onboard.
First, there was the cleaning. Potential buyers might be thrown off by anything being on the kitchen counters, so the family had to remove everything.
“That’s how everybody lives right,” Hebert mused. “Nobody has anything on the counters.”
The Heberts launched their house-selling effort in a market that boasts high home prices and interest rates along with a lack of inventory have slowed the housing market in Columbus going into 2023.
But experts say the industry remains strong overall.
Single family home prices increased 16.7 percent in the state in 2022, according to a report by the Georgia Association of Realtors. Century 21 Premier Real Estate had a total of 253 new listings in December 2021, which dropped to 205 new listings in December 2022, broker Shep Mullin told the Ledger-Enquirer.
To prepare their home to be sold, Hebert’s dogs were relegated to staying outside to ensure people who wanted to see the house would feel comfortable inside. The kids were bribed with a budget to decorate their new rooms if they helped keep their current home clean.
Hebert has used these psychological tricks to help potential buyers envision themselves in his home before, and he knew that this was part of the process. Fortunately, selling his home for $250,000 was not a challenge in Muscogee County’s current housing market.
High home value
Home prices in Columbus rose about 20-30% since 2020, Mullin said. A $100k to $200k home in 2020 is now worth about $240k to $260k, he said.
The increases in home prices in Columbus were smaller than what was posted by the state last year, said Jerald Mitchell, president and CEO of the Greater Columbus Chamber of Commerce, while delivering the economic forecast for the region.
Prices began rising about one to two years before the pandemic, Mitchell told the Ledger-Enquirer, and the phenomenon isn’t unique to Columbus.
“The beauty of Columbus is that while there were increases or rises in housing prices, the Columbus market in general did not get as hot as the national market,” he said.
Zillow publishes a metric called the Zillow Home Value Index (ZHVI), which reflects the typical value for homes in the 35th to 65th percentile range in a given region.
The ZHVI, or typical home value, for Columbus was $126,792 in December 2019. By the end of 2022, the number increased to $172,250.
One of the first things Hebert did after moving into their current home was build a new deck. He and Sarah Jane purchased the home for about $200,000, he said, and he doesn’t believe the new deck added $50,000 in value.
While Hebert feels lucky that the family found a new home that serves their needs better, he said, the price increase is noticeable.
“Our sale price is $250,000,” Hebert said. “And that’s just in three years (since they bought the home). The home that we’re purchasing is $316,000, so it’s kind of a big leap for us.”
Low inventory
Lack of inventory is a driving factor keeping housing prices high, Mullin said.
“We have smaller demands, obviously, with the higher interest rates,” he said. “But we still have a smaller inventory of homes than we had a year or two ago.”
At the end of 2019, there were about 1,408 homes for sale in Columbus, according to Zillow. However this number fell to as low as 850 last February. Although inventory rose to 1,047 by the end of 2022, it is still well below the inventory seen in years past.
A lot of people bought homes or got them refinanced at 2-3% interest rates in the past two or three years, Mullin said. These individuals are unlikely to want to move from a low interest rate to a 6.5% interest rate, he said.
Brad Baker, the Hebert family’s real estate agent who works at Coldwell Banker, agrees with this reasoning for why many people are not looking to sell right now.
“I don’t think that’s the worst thing in the world because they’re building equity,” he said. “And they are growing this asset that they have.”
As interest rates come down, Baker expects there to be more people willing to sell.
New construction in Columbus has also slowed, Mullin said. This has happened for a variety of reasons including a lack of labor and inflation.
“The cost for new builds has gotten so high that many times it’s out of the affordability range,” he said. “So, they’re just not building as many new homes as they were.”
Another situation that Baker has encountered are people who became “accidental landlords” after buying homes at high interest rates before the Great Recession.
“People who bought their house in 2006, 2007 at the very top of what we think of as that (housing) bubble,” Baker said. “And they didn’t want to keep it, but they couldn’t sell it because they owed so much.”
In the last few years many of these individuals have finally reached enough equity to sell those homes, he said, which he hopes will help add more inventory to the housing market.
High interest rates
High interest rates remains a significant factor in buying a new home, Mullin reminded.
“The house that they could afford last year, they can’t afford this year,” he said.
Century 21’s transactions have slowed about 30% because of the higher rates and lack of inventory, Mullin said. Rates in Columbus rose from about 3% to 6.5%, he said.
Typically, when interest rates rise, home prices decrease because there is less demand. However a lack of inventory kept prices high, Mullin said.
The average mortgage rate for a 30-year fixed loan is 5.73% in Columbus, according to NerdWallet. The rates are getting much better, Baker said, and he recommends that people reach out to local lenders.
Baker received a rate sheet earlier this week with rates in the 4-5% range for the first time since August, he said.
“We would love for you to talk to a local lender who knows the area,” Baker said. “But as the rates go down, your buying power goes up and your price range goes up.”
A resilient market
The housing market continues to be a source of creating wealth for families, Mitchell said, and people should not be afraid to enter the market.
Individuals who already own their home should also not be discouraged from improving those structures, Mitchell said, because those are going to be things that will pay dividends for them in the long run.
Columbus is going to be much more resilient than most markets because the average sale price is about $100,000 less than the country’s average price, Mullin said. Around 30% of the market is military and VA, he said, which helps the market stay strong.
Hebert and his family are expecting to move into their new home by the end of next month MARCH?, he said. The house was built in the early 20th century and has been updated well for a nice mix of old and new.
The family is excited to have a larger yard and longer driveway providing a space for the kids to play safely away from traffic, he said. Ultimately, he is thankful for his friendship with Baker, and the community of real estate agents that helped his family find their new home.
Their current home was only on the market for about a week, Hebert said, before it sold. Everything is about price, preparation and promotion, Baker said. Despite the smaller inventory, Baker has been able to get multiple offers on seven of the eight homes he’s listed so far in 2023.
The average down payment for a home in Georgia last year was $21,880, according to Bankrate. In Columbus, the average annual premium for homeowners insurance is $1,461, and the average property tax rate is 0.93%.
“People should not be afraid if they’ve got good savings,” Mitchell said. “If they’ve got reliable employment, they should not be afraid to invest in a house.”
